Investment Insights

Daily Insights

Focus of the Day

  • Anticipating aggressive ECB rate cuts, DAX index reached a record high

Other Commentaries

  • Offshore RMB briefly fell below 7.3 as market expected further easing; Korean won hit a two-year low after South Korea declared emergency martial law which was later lifted; US October JOLTS job openings exceeded expectations

Investment Analysis

Stock Markets Analysis

Stock Markets View

  • "Black Friday" sales were satisfactory, and US stocks continued to hit new highs on the back of expectations of tax cuts and relaxed regulations. Markets focus on a series of employment data and Powell's speech
  • There is a high chance that the ECB will cut rates again in December, but France may fail to pass the budget smoothly, which will make the European economic outlook uncertain, and the performance of European stocks is expected to be more volatile
  • The strengthening of the USD earlier dragged down Asian stock markets, but the strength of the US economy will benefit some Asian exports, and some Asian economies have also raised their economic growth forecasts for next year
  • The weakening of the USD has not boosted the Latin American market, but with weak commodity prices and the recent sluggish stock and currency performance of Brazil, a major Latin American country, the overall emerging markets may continue to fluctuate
  • The Mainland's resumption of multi-entry visas for Shenzhen residents visiting Hong Kong has stimulated the rebound of Hong Kong stocks. While the market is waiting to see the Central Economic Work Conference to set the tone for next year's economic direction, Hong Kong stocks have consolidated at the 100-day moving average
Note:

Positive - Expect that the particular asset class potentially may perform well relative to the relevant major global benchmark(s) in the long run
Neutral - Expect that the particular asset class potentially may perform in line relative to the relevant major global benchmark(s) in the long run
Cautious - Expect that the particular asset class potentially may not perform well or in line relative to the relevant major global benchmark(s) in the long run

Provided by Hang Seng Investment Services Limited

Bond Markets View

  • US PCE is in line with expectations, and the chances of the Fed cutting rates in December have increased, stimulating a fall in US treasury yields and providing support for the performance of sovereign bonds
  • French political and fiscal problems may have a negative impact on the eurozone economy and accelerate the pace of interest rate cuts by the ECB, which will benefit the performance of investment grade bonds
  • Large economies in Asia, including China and South Korea, have maintained relatively loose monetary policies, which is beneficial to the trend of Asian investment grade bonds
  • Resurrection in expectations for the Fed to cut rates in December, coupled with market optimism about the US economic outlook, has driven continued capital inflows into high yield bonds
  • Sales of the mainland's top 100 real estate companies decreased MoM in November, but transactions in first-tier cities have steadily picked up. Other cities are expected to gradually benefit from property market measures, and domestic housing debt continues to be consolidated
  • The USD’s fall from highs supported the performance of emerging market bonds, but the Brazilian government's spending reduction plan disappointed the market, affecting the investment sentiment in Latin American bond markets
Note:

Positive - Expect that the particular asset class potentially may perform well relative to the relevant major global benchmark(s) in the long run
Neutral - Expect that the particular asset class potentially may perform in line relative to the relevant major global benchmark(s) in the long run
Cautious - Expect that the particular asset class potentially may not perform well or in line relative to the relevant major global benchmark(s) in the long run

Provided by Hang Seng Investment Services Limited

Asset Allocation Focus

  • Bonds – The US inflation indicator PCE is in line with expectations, and the market expects that the next US Treasury Secretary candidate Bessint will reduce the fiscal deficit and balance inflation. In the past two weeks, the US 10-year Treasury yield has dropped 30 basis points from the high in mid-November, and is currently close to 4.2% level. The market still has doubts about whether Trump's fiscal and trade policies will push up US inflation. It is expected that bond yields will still be volatile, and investment strategy of maintaining a duration of 3-6 years will be less affected by interest rate changes
  • Equities – The market continues to be optimistic about US stocks, which have recorded net capital inflows for eight consecutive weeks. At present, the valuations of US technology giants are on the high side, and profit growth is slowing down QoQ. In November, the Dow outperformed the S&P 500 and the Nasdaq, and the rotation of the capital sector is obvious. US stock investment should maintain both tradition and growth, and diversify sector strategies

Provided by Hang Seng Investment Services Limited

Investment Commentaries

第三季增持債券 審慎部署股市

Driven by stimulus, funds are flowing into HK stock market (Chinese only)

How to invest in US stocks after Trump's win (Chinese only)

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